Audit, tax, advisory and risk firm, Crowe say growth back on the agenda as manufacturing looks forward in 2022

Promotional Business Feature: Crowe UK - Pictured, Chris Mould, Partner at Crowe in Cheltenham,
Chris Mould

Chris Mould, Partner at national audit, tax, advisory and risk firm Crowe in Cheltenham, looks at what lies ahead for manufacturers.

It has not been the easiest couple of years for manufacturing with multiple challenges, not least of which has been a global pandemic. In addition to lockdowns and furlough, manufacturing has also had to rise to the challenge of dealing with Brexit, plus global supply chain issues and shortages.

Even so, respondents to the annual Manufacturing Outlook Report survey conducted by Crowe were surprisingly upbeat.

The headline statistic that leaps out is that 74% expect turnover to grow in the next year, but worryingly, 92% feel the profitability of their business has been affected by the cost and/or availability of raw materials.

Another perennial issue is that 82% have experienced trouble in recruiting skilled employees, with 30% saying their main barrier to growth over the next 12 months will be recruiting and retaining staff.

Further concerns reveal 90% believe the apprenticeship levy is not effective, and 82% believe the government’s incentives are ineffective in promoting exporting.

79% believe their competitors are based in UK or Europe, but the survey shows a significant reduction in the influence of Brexit and trading tariffs, with the number of respondents seeing this as a barrier more than halving in 2021.

2021 covered a period where trading arrangements with the EU carried a number of interim measures designed to reduce friction, many of which expired on 1 January 2022. The full impact of the UK’s exit from the EU will only likely be felt as the interim arrangements end and trade agreements are finally put in place with various global trading partners.

Growth will place demands on working capital requirements in the short term and investment capital needs in the longer term. Availability of credit on a continued basis will almost certainly not be as easy as during the pandemic.

Coronavirus Business Interruption Loan Scheme (CBILS) and Bounce Back lending has been replaced by the Recovery Loan Scheme (RLS) and it has been widely noted that this scheme is not getting traction with at least the ‘big four’ UK banks. Companies seeking lending for the future have experienced difficulty sourcing this without repaying CBILS/Bounce Back in full as these loans are currently not transferrable.

The Chancellor of the Exchequer set a strategy in his autumn Budget, relying on a strong economic recovery to fund the unprecedented level of Coronavirus support extended during the pandemic.

Growth expectations support this, however a successful economic recovery cannot alone be based on domestic demand and therefore stimulating and supporting UK export trade is vital.

Echoing the Manufacturing Outlook Report of earlier years, Crowe’s survey has consistently revealed that businesses do not see the existing government support as effective in supporting UK manufacturers.

The survey notes that 77% of companies have made an R&D claim in the past 12 months

What about the other 23%?  – Are you fully aware of what qualifies as R&D?

Could you be missing out on significant support?

At present, 31% say their “go to” external advisor is their accountant and 71% are members of a manufacturing network. Strong relationships identified with networks and trusted advisors need to be robust to achieve the levels of growth anticipated.

At Crowe, we pride ourselves on our manufacturing knowledge, empathy and insight as well as a real desire to help you think strategically and make smart decisions that create lasting value.

For more details contact Chris Mould on 01242 234421 or chris.mould@crowe.co.uk

Manufacturing Outlook Report 2022The report can be found at

www.crowe.com/uk/industries/manufacturing

 

www.crowe.com/uk

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